When you are to entering the real estate market, particularly for the first time, some of the terms might be confusing. One of the first terms that could confuse is “Realtor.”
While Realtor® is often used interchangeably with “real estate agent,” they aren’t the same.
We will look at the definition of a Realtor® so that you are better informed when you need the services of one of these professionals. Maximum Real Estate Exposure has an excellent resource that covers many of the things you should know about being a Realtor®.
The Realtor definition is a real estate agent who is also a member of the National Association of Realtors. While you don't have to be a member of the NAR to work as a real estate agent, most agents are licensed Realtors.
Though real estate agents are licensed by the state, also being licensed by the National Association of Realtors® means they have to operate to higher standards. Realtors follow a code of ethics, ensuring they will operate professionally when dealing with their clients and other agents.
It isn't just the code of ethics that makes working with a realtor® the better option. Realtors are also part of a local and national network of professionals and benefit from further education courses to improve their skills and keep them up-to-date. This can further develop their negotiation skills and contract knowledge to better serve their clients in real estate transactions.
A Realtor also has more access to important market information. This helps in market analysis, to make sure their client gets the best price. Their membership gives them the use of transaction management services, helping streamline the home buying and selling process.
The process of a real estate transaction involves lots of paperwork for the agent, and any mistake could be costly. But since Realtors have more education, there is a lower chance of problems like these slowing down the transaction.
Realtors can be brokers, real estate agents, or sometimes both.
A broker is normally the person who manages a real estate agency and has agents working for them. They could own the agency or operate a franchise, but either way, they are required to complete more courses and hold a broker license. A broker has more responsibility than a real estate agent, not only managing agents but also ensuring real estate laws are followed.
A real estate agent works as a salesperson in a brokerage. A real estate agent can also hold a broker license while working as an agent. These agents are sometimes known as broker associates and help the managing broker oversee the agency.
Real estate licensing rules vary in each state, though generally involve taking a course and then passing an exam.
In some states, there isn't a real estate agent license. Instead, requiring would-be agents to take the courses a broker would and pass that exam. Realtors cannot be paid a commission until they are licensed within the state they are working in.
While it is easy to think real estate agents make a lot of money for just a few hours work, the reality is very different. You might imagine that most buyers find a home after only a few showings, quickly have their offer accepted, and then are moving in a short time later.
However, the process of buying or selling a home is much more complicated and time-consuming than it might appear. An average buyer takes around 12 weeks and is shown 10 properties in that time before they find the one that is right for them.
Even then, the process isn't complete, and it could be 30 days or more until closing. Only after that will the Realtor receive earnings from the commission paid to their brokerage. But that only happens if things go to plan, the buyer might change their mind leaving the agent with nothing to show for potentially weeks of their time and effort.
The same problem can happen when the real estate agent is representing a seller. Since most of the time, the agent will only be paid when the home actually sells, if they don't find a buyer, they don't get paid
While it might appear that Realtors get paid a lot, the commission is split between multiple parties. The commission is usually split 50/50 between buyers’ and sellers' agents. This money is paid to the agent’s brokerage, which takes their fee before paying the rest to the agent involved in the transaction.
From the money left, the agent still has to pay federal and state income taxes, health insurance, licensing fees, brokerage fees, and other expenses associated with running their business.
Since Realtors need to follow a strict code of ethics, they generally are more professional than a real estate agent who doesn't invest in their career. When getting into the real estate industry it is wise to research what it means to become one of the best of the best.
Become a Realtor® today!